Business

Italy’s Monti seeks Chinese investment, says reforms working

March 31, 2012

Wen ushers Monti (left) towards a welcoming ceremony at the Great Hall of the People in Beijing March 31, 2012. — Reuters picWen ushers Monti (left) towards a welcoming ceremony at the Great Hall of the People in Beijing March 31, 2012. — Reuters picBEIJING, March 31 — Italian Prime Minister Mario Monti urged China today to step up investment in Italy and tried to reassure Beijing that the euro zone debt crisis was close to resolution and tough economic reforms passed by his government were working.

Speaking after meetings with officials including Premier Wen Jiabao and the head of the China Investment Corporation (CIC), Lou Jiwei, Monti said there had been clear interest in greater cooperation but he had no concrete measures to announce.

“I don’t want to be too ambitious but my hope is to generate some new enthusiasm on Italy,” he told reporters.

“We underlined one of the aspects which in our judgment should be reinforced, the aspect of investment,” he said.

On the last leg of a tour that has also included Kazakhstan, South Korea and Japan, Monti reiterated remarks he had made in Tokyo — that the worst of the euro zone debt crisis appeared to have been resolved.

“No one can say the euro zone crisis is totally over, and I think it would also be a dangerous attitude for Italian policy if we were to come into a state of complacency,” he told reporters.

But he said the crisis was “virtually over” and fears that Italy could become a new flashpoint had eased since the turmoil last year which swept away Prime Minister Silvio Berlusconi and brought Monti’s technocrat government to power.

“This so far has not happened, and I believe it will not happen. So allow me no complacency at all, but some relief on this point,” he said.

He welcomed the creation of a €700 billion (RM2.8 trillion) firewall to ward off future outbreaks in the euro zone crisis but said he would have preferred an even bigger shield, on the basis that the larger the firewall, the less likely it was to be used.

Monti’s unelected government has passed a series of painful spending cuts, tax rises and pension reforms to help cut Italy’s huge public debt but has run into difficulties after an initial honeymoon period in which market confidence improved sharply.

In particular, Monti faces growing pressure over labour reforms that are strongly resisted by unions and by the centre-left Democratic Party, which backs his government in parliament in a coalition with the centre right.

Monti says the reforms, which would weaken the strong employment protection enjoyed by some Italian workers, are needed to attract badly needed foreign investment and help make the job market fairer for younger workers.

He said the CIC’s Lou Jiwei had told him the CIC had considered investing in Italy last year but had decided against it, partly over concerns about the rigidity of labour market regulations.

“They hesitated to go further because they saw some problems in the Italian economy. One of the problems that was specifically mentioned was an insufficiently flexible labour market,” Monti said.

Monti says rules which make it hard for companies to fire employees with permanent contracts discourage them from hiring full-time staff and condemn growing numbers of mainly younger workers to a series of insecure, temporary jobs.

In a mark of the opposition he faces at home on the issue, Susanna Camusso, head of the CGIL, Italy’s biggest trade union federation, repeated demands that the government drop one of the key elements of the planned reform.

She said Article 18 of the Italian labour code, which ensures that workers deemed to have been wrongfully dismissed by their employers have the automatic right to re-instatement was a fundamental “measure of the freedom and dignity of workers”.

The CGIL will join the other main union federations in a demonstration on April 13 against the government’s reforms and plans a day-long general strike to demand that the Article 18 protections are preserved. — Reuters

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